Baby Boom to Bust: Time to Raise Retirement Age?

The oldest of the Baby Boomers turn 65 next year - and, for many, that means retirement. As more boomers pack it in, the number of Americans collecting Social Security retirement benefits is projected to nearly double over the next 25 years to more than 76 million.

The system won't be able to handle the strain without an overhaul. CBS News senior business correspondent Anthony Mason continues a series of reports by CBS News and USA TODAY called "Senior Moment," exploring the aging of an iconic generation and the impact on the nation.

Social Security pays out more than $700 billion a year. But the system is headed for a crisis.

"Americans are living longer, but they're retiring earlier and saving less," said Andrew Biggsof the American Enterprise Institute. "Something in that equation has to give."

With 70 million baby boomers headed towards retirement, the government is confronting a painful reality.

Congress may argue over how to reform the system, but there's no debating that we're running out of time. Under current projections, in just 27 years Social Security won't have enough money coming in to pay out benefits to everyone who is eligible.

Today, there are nearly 3 workers for each Social Security beneficiary. By 2035, there will be only 2.

"Social security was originally designed as insurance against poverty for people in old age," Biggs said. "Today Social Security is paying more and more benefits to people who are essentially middle aged and middle or higher income."

In 1950, the typical retiree didn't claim Social Security until age 68. Today, the average claiming age is 63, when typically a retiree has another 20 years to live.

What does he think about raising the retirement age? "Well, I think it's one of the easier things to do to make this thing work. But we shouldn't do it on current retirees," he said.

"What I would propose is to have the retirement age pegged to longevity," he added. "So for my generation the retirement age will be 67, for my kids 68, 69 down - it wouldn't reach 70 until the year 2103."

Nearly a century from now, the workers who would have to worry about that have not even been born yet.

A government study raised a red flag last week - warning that raising the retirement age would hurt poorer workers the most, and increase disability claims by those elderly unable to work.

Raising the retirement age alone won't solve social security's problems. Most reform plans also call for higher payroll taxes on the wealthy and cuts in benefits.